[Code of Federal Regulations]
[Title 49, Volume 4]
[Revised as of October 1, 2003]
[CITE: 49CFR250]
[Page 687-692]
TITLE 49--TRANSPORTATION
CHAPTER II--FEDERAL RAILROAD ADMINISTRATION, DEPARTMENT OF TRANSPORTATION
PART 250--GUARANTEE OF CERTIFICATES OF TRUSTEES OF RAILROADS IN REORGANIZATION--Table of Contents
Sec.
250.1 Form and content of application.
250.2 Required exhibits.
250.3 Fees.
250.4 Execution and filing of application.
250.5 General instructions.
Authority: Sec. 3(f) of the Emergency Rail Services Act of 1970,
Pub. L. 91-663; sec. 1.49(m), regulations of the Office of the Secretary
of Transportation, 49 CFR 1.49(m).
Source: 36 FR 770, Jan. 16, 1971, unless otherwise noted.
Sec. 250.1 Form and content of application.
The application shall include, in the order indicated and by section
numbers and letters corresponding to those used in this part, the
following:
(a) As to the Trustee:
(1) Full and correct name and principal business address.
(2) The name and address of the reorganization court under the
direction of which the Trustee is acting and the docket number of the
proceeding.
(3) Name, title, and address of the person to whom correspondence
regarding the application should be addressed.
(4) Brief description of the loan and its purpose or purposes,
including statements of
(i) The total amount of the loan and the amount of the guarantee
being sought,
(ii) The purpose or purposes for which the loan proceeds will be
used,
(iii) The maturity date or dates,
(iv) The date or dates on which the Trustee desires the funds to be
made available, and
(v) The rate of interest.
(5) Statement, in summary form, showing financial obligations to or
claims against the United States or obligations for which the United
States is guarantor, if any, by applicant or any applicant's parent as
to the date of the application, including:
(i) Status of any claims under litigation; and
(ii) Any other debts or credits existing between the applicant and
the
[[Page 688]]
United States, showing the department or agency involved in such loans,
claims and other debts;
(6)(i) Statement on behalf of the Trustee that the Trustee has
endeavored to obtain a loan or loans for the purpose or purposes
proposed without a guarantee by the Secretary, but has not been able to
obtain a loan therefor upon reasonable terms, or if only upon terms
considered unreasonable, a statement setting forth such terms and
describing any facts relevant thereto.
(ii) Information as to the Trustee's efforts to obtain the needed
financing without a guarantee thereof by the Secretary, and as to the
results of such efforts. (See Sec. 250.2(b)(1) as to exhibits on this
subject.)
(7) Full and complete statement, together with independent
supporting evidence, where feasible, concerning the effect that
cessation of essential transportation services of carrier would have on
the public welfare.
(8) Full and complete statement, together with supporting evidence,
where possible, demonstrating that cessation of essential transportation
services by applicant carrier is imminent.
(9) Full and complete statement, together with supporting evidence,
if possible, that there is no other practicable means of obtaining funds
to meet payroll and other expenses necessary to provide essential
transportation services other than the issuance of Trustee certificates.
Such statements shall include in detail a complete listing of all
nontransportation assets of the carrier and corporate affiliates, or
subsidiaries having a fair market value of not less than $50,000,
together with the amount of encumbrances thereon, if any, and a
statement or plan for the disposition or sale of such assets as a means
of obtaining funds necessary for essential transportation services.
(10) Full and complete statement, together with supporting evidence,
if possible, demonstrating, with particularity, that the carrier can
reasonably be expected to become self sustaining within a reasonable
period of time.
(11) Full and complete statement, together with supporting evidence,
that the probable value of the assets of the carrier in the event of
liquidation provides reasonable protection to the United States.
(b) As to the holder or holders:
(1) Full and correct name and principal business address.
(2) Names and addresses of principal executive officers and
directors, or partners.
(3) Reference to applicable provisions of law and the charter or
other governing instruments conferring authority to the lender to make
the loan and to accept the proposed obligation.
(4) Brief statement of the circumstances and negotiations leading to
the agreement by the lender to make the proposed loan, including the
name and address of any person or persons, or employees of the carrier,
representing or purporting to represent the Trustee in connection with
such negotiations.
(5) Brief statement of the nature and extent of any affiliation or
business relationship between the lender and any of its directors,
partners, or principal executive officers, on the one hand, and, on the
other, the carrier and any of its directors, partners, or principal
executive officers, or any person or persons whose names are required to
be furnished under paragraph (b)(4) of this section.
(6) Full and complete statement of all sums paid or to be paid and
of any other consideration given or to be given by lender in connection
with the proposed loan, including with respect thereto:
(i) Name and address of each person to whom the payment is made or
to be made,
(ii) The amount of the cash payment, or the nature and value of
other consideration,
(iii) The exact nature of the services rendered or to be rendered,
(iv) Any condition upon the obligation of the lender to make such
payment, and
(v) The nature of any affiliation, association, or prior business
relationship between any person named in answer to paragraph (6)(i) of
this section and the lender or any of its directors, partners, or
officers.
(c) As to the impact of the financing on the environment. (1)
Summary statement of the use to which funds will be
[[Page 689]]
put and any anticipated impact on the environment. After reviewing this
submission, the Administrator retains the right to require the Trustee
to submit a detailed assessment of the financing's impact on the
environment in a general format to be supplied by the Administrator.
(2) [Reserved]
[44 FR 23851, Apr. 23, 1979]
Sec. 250.2 Required exhibits.
There shall be filed with and made a part of each application and
copy thereof the following exhibits, except that exhibits filed with the
Administrator pursuant to some other statutory provision or regulation
which are in the same format as the following exhibits may be
incorporated in and made part of the application filed under this part
by reference. While the application is pending, when actual data become
available in place of the estimated or forecasted data required in the
exhibits under this part, such actual data must be reported promptly to
the Administrator in the form required in the appropriate exhibit.
(a) The following exhibits are required concerning the Trustee and
the carrier:
(1) As Exhibit 1, copy of duly certified order of the court, or
instrument of appointment, appointing trustees of the carrier.
(2) As Exhibit 2, a certified copy of the order(s) of the
reorganization court having jurisdiction of applicant authorizing (i)
the filing of the application with the Administrator for a guarantee of
the Trustee's certificate; (ii) filing of the application with the
Interstate Commerce Commission for authority to issue a Trustee's
certificate; (iii) such pledge of security for the loan and the
guarantee as the applicant proposes in connection with Exhibit 3; and
(iv) compliance by the Trustee with conditions to the guarantee imposed
by law and the Administrator.
(3) As Exhibit 3, full and complete statement, together with
supporting evidence, that the probable value of the assets of the
railroad in the event of liquidation provides reasonable protection to
the United States.
(4) As Exhibit 4, a map of the carrier's existing railroad.
(5) As Exhibit 5, statement showing miles of line owned; miles
operated; number of units of locomotives, freight cars, and passenger
cars owned and leased; principal commodities carried; and identification
of the ten most important industries served.
(6) As Exhibit 6, statement as to whether any railroad affiliated
with the carrier has applied for or received any Federal assistance
since 1970.
(7) As Exhibit 7, statement showing total dividends, if any,
declared and total dividends paid for each of the last 5 calendar years
and for each month of the current year to latest available date.
(8) As Exhibit 8, a copy of applicant's most recent year-end general
balance sheet certified by applicant's independent public accountants,
if available, and a copy of applicant's most recent unaudited general
balance sheet as of a date no less recent than the end of the third
month preceding the date of the filing of the application. The unaudited
balance sheet shall be presented in account form and detail as required
in Schedule 200 of the Commission's annual report R-1 or R-2, as
appropriate, together with the following schedules (where changes in
accounts from the end of the prior year to date of the application have
not been significant, copies of the appropriate schedules in the prior
year's R-1 or R-2 with marginal notations listing the changes may be
substituted):
(i) Particulars of Account 704, Loans and Notes Receivable, in form
and detail as required in Schedule 201 of annual report R-1 for the
Class I railroads, and in similar form for the Class II railroads except
that for Class II railroads, loans and notes receivable that are each
less than $25,000 may be combined into a single amount;
(ii) Particulars of investment in affiliated companies and other
investment in form and detail required in Schedules 205 and 206 of
annual report R-1, or Schedules 1001 and 1002 of annual report R-2, as
appropriate;
(iii) Particulars of balances in Accounts 741, Other Assets, and
743, Other Deferred Changes, in form and detail required in Schedule 216
of annual report R-1 or Schedule 1703 of annual report R-2, as
appropriate;
[[Page 690]]
(iv) Particulars of loans and notes payable in form and detail
required in Schedule 223 of annual report R-1, or Schedule 1701 of
annual report R-2, as appropriate, as well as information as to bank
loans, including the name of the bank, date and amount of the original
loan, current balance, maturities, rate of interest, and security, if
any;
(v) Particulars of long-term debt in form and detail required in
Schedules 218 and 219 of annual report R-1 or Schedules 670, 695, 901,
902 and 1702 of annual report R-2, as appropriate, together with a brief
statement concerning each mortgage, pledge, and other lien, indicating
the property or securities encumbered, the mortgage limit per mile, if
any, and particulars as to priority;
(vi) Particulars of balance in Account 784. Other Deferred Credits,
in form and detail required in Schedule 225 of annual report R-1 or
Schedule 1704 of annual report R-2, as appropriate; and
(vii) Particulars as to capital stock in form and detail required in
Schedules 228, 229, and 230 of annual report R-1 or Schedule 690 in
annual report R-2, as appropriate.
(9) As Exhibit 9, a copy of carrier applicant's report to its
stockholders or report of the trustee for each of the 3 years preceding
the year in which the application is filed.
(10) As Exhibit 10, applicant's most recent annual income statement
certified by applicant's independent public accounts if available, and a
spread sheet showing unaudited monthly and year-to-date income statement
data for the calendar year in which the application is filed in account
form similar to that required in column (a) of Schedule 300 of annual
report R-1 or R-2 as appropriate. For those months preceding and ending
upon the date of the unaudited balance sheet presented in Exhibit 8, the
income statement shall be reported on an actual basis and so noted. For
those months between the dates of the unaudited balance sheet and the
filing of the application, the income statement data shall be reported
on an estimated basis and so noted and shall be submitted in conjunction
with corresponding estimated month-end balance sheets. For those months
between the date of the application and the end of the year income
statement data shall be presented on a forecasted basis and so noted and
shall be submitted in conjunction with a forecasted balance sheet as at
the year end.
(11) As Exhibit 11, spread sheets showing for each of the four years
subsequent to the year in which the application is filed, both before
and after giving effect to the proceeds of the assistance required in
the application:
(i) Forecasted annual income statement data in account form and
detail similar to that required in column (a) of Schedule 300 of annual
report R-1 or R-2 as appropriate, including the subaccounts comprising
line 2 (railway operating expenses), as specified by lines 64, 92, 105,
159, 166, and 180 of Schedule 320; and
(ii) Forecasted year-end balance sheets in account form and detail
similar to that required in Schedule 200 of annual report R-1 or R-2, as
appropriate. These spread sheets shall be accompanied by a statement
setting forth the bases for such forecasts.
(12) As Exhibit 12, a spread sheet showing changes in financial
position for the year in which the application is filed in account form
and detail as required in Schedule 309 of annual report R-1 and R-2 as
appropriate as follows:
(i) For that period ending on the date of the unaudited balance
sheet in Exhibit C, based upon actual data; and
(ii) For that period from the balance sheet date to the end of the
year, based upon estimated and forecasted data.
(13) As Exhibit 13, a spread sheet showing forecasted changes in
financial position for each of the four calendar years subsequent to the
year in which the application is filed, both before and after giving
effect to any funds requested in the application and including a
statement showing the bases for such estimates, in account form and
detail as required in Schedule 309 of the annual Report R-1 for Class I
railroads in similar form and detail for Class II railroads.
(14) As Exhibit 14, a statement showing actual cash balance at the
beginning of each month and the actual cash receipts and disbursements
during each month of the current year to the date of the latest balance
sheet furnished as
[[Page 691]]
Exhibit 8, together with a monthly forecast (both before and after
giving effect to use of proceeds from the proposed loan) for the balance
of the current year and the year subsequent thereto.
(15) As Exhibit 15, a general statement setting forth the facts as
to estimated prospective earnings and other funds upon which applicant
relies to repay the loan.
(b) The following exhibits are required as to the transaction.
(1) As Exhibit 16, copies of correspondence from all, and not less
than three, lending institutions or security underwriters to which
application for the financing has been made, evidencing that they have
declined the financing unless guaranteed by the Secretary or specifying
the terms upon which they will undertake the financing without such
guarantee.
(2) As Exhibit 17, specimens, or forms where specimens are not
available, of all securities to be pledged or otherwise issued in
connection with the proposed loan; and in case of mortgage, a copy of
the mortgage or indenture.
(3) As Exhibit 18, copies of the loan agreement entered into, or to
be entered into, between the Trustee and lender, and of any agreements
or instruments executed or be executed in connection with the proposed
loan.
[44 FR 23852, Apr. 23, 1979]
Sec. 250.3 Fees.
On date of final payment of the loan guaranteed by the Secretary
pursuant to application filed under this part, the applicant carrier or
the trustee, if still in existence, shall pay, or cause to be paid, to
the Administrator as a guarantee fee such amount as the Administrator
hereafter may determine and prescribe as necessary to cover the
administrative costs of carrying out the provisions of the Emergency
Rail Services Act of 1970.
Sec. 250.4 Execution and filing of application.
The following procedure shall govern the execution and filing of the
application:
(a) The original application shall bear the date of execution and be
signed with ink by or on behalf of the trustee and the lender. Execution
on behalf of the trustee shall be by the trustee or trustees having
knowledge of the matters therein set forth. Persons signing the
application on behalf of the trustee and lender, respectively, shall
also sign a certificate in form as follows:
(Name of official) ------------------------ certifies that he is the
------------------------ (title of official) of the --------------------
---- (name of carrier or lender); that he is authorized on the part of
said applicant to sign and file with the Administrator this application
and exhibits attached thereto; that he has carefully examined all of the
statements contained in such application and the exhibits attached
thereto and made a part thereof relating to the aforesaid --------------
-- (name of carrier or lender); that he has knowledge of the matters set
forth therein and that all such statements made and matters set forth
therein are true and correct to the best of his knowledge, information,
and belief.
(Date)
(b) There shall be made a part of the original application the
following certificate by the Chief Accounting Officer of the carrier:
(Name of officer) ------------------------, certifies that he is --
---------------------- (title of officer) of --------------------------
------ (name of carrier applicant); that he has supervision over the
books of account and other financial records of the carrier and has
control over the manner in which they are kept; that such accounts are
maintained in good faith in accordance with the effective accounting and
other orders of the Interstate Commerce Commission; that he has examined
the financial statements and supporting schedules included in this
application and to the best of his knowledge and belief said statements
accurately reflect the accounts as stated in the books of account; and
that, other than the matters set forth in the exceptions attached to
such statements, said financial statements and supporting schedules
represent a true and complete statement of the financial position of the
carrier applicant and that there are no undisclosed assets, liabilities,
commitments to purchase property or securities, other commitments,
litigation in the courts, contingent rental agreements, or other
contingent transactions which might materially affect the financial
position of the carrier applicant.
(Date)
(c) The original application and supporting papers, and six copies
thereof for the use of the Administrator shall
[[Page 692]]
be filed with the Administrator, Federal Railroad Administration,
Department of Transportation, Washington, DC. Simultaneously, one copy
of the application and supporting papers shall be filed with the
Secretary of the Interstate Commerce Commission, Washington, DC. Each
copy shall bear the dates and signatures that appear in the original and
shall be complete in itself, but the signatures in the copies may be
stamped or typed. If unusual difficulties arise in the furnishing of any
of the exhibits required in Sec. 250.2, the carrier applicant or the
lender, upon appropriate showing and with the consent of the
Administrator, may file a lesser number.
(d) In the event the furnishing of exhibits in the detail required
by Sec. 250.2 is shown by the applicant or applicants to be unduly
burdensome in relation to the nature and amount of the loan, the
Administrator may modify the requirements of said section. In addition,
the Administrator may waive or modify any requirement of this part upon
good cause shown, or make any additional requirements he deems
necessary.
Sec. 250.5 General instructions.
(a) If the application is approved by the Administrator and the
Secretary of Transportation and the latter agrees to make the guarantee,
the following documents will be required for deposit with the
Administrator before the transaction is closed:
(1) Final opinion by counsel for the Trustee to the effect that he
is familiar with the corporate powers of the carrier applicant and the
orders of the reorganization court; that the Trustees of the carrier
applicant are authorized to execute and deliver the certificate or other
obligations evidencing the same, and to pledge and hypothecate any
securities pledged as collateral; that the certificate or other
obligations so executed and so delivered constitute the valid and
binding obligations of the Trustees of the carrier that the certificate
or other obligations of the Trustee will be treated as an expense of
administration and receive the highest lien on the railroads property
and priority in payment under the Bankruptcy Act, and that the lender
and the Secretary will obtain a lien on any security involved of the
rank and priority represented by the Trustee. Such opinion shall also
cover the priority and lien of each item of the collateral offered.
(2) Certified copies of the reorganization court orders and decrees
authorizing the Trustee to execute and deliver the certificates or other
obligations and to give the security under and according to the terms of
the loan and guarantee as prescribed by the Administrator. Such order or
orders of the reorganization court shall specify that trustee
certificates, guaranteed by the Secretary as to payment of principal and
interest, shall be treated as an expense of administration and receive
the highest lien on the railroad's property and priority in payment
under the Bankruptcy Act.
(3) Unexecuted copies of the foregoing documents will be delivered
to the Administrator 3 business days prior to closing.
(b) The guarantee by the Secretary of a loan pursuant to an
application filed as provided in this part should not be construed as
relieving a carrier from complying with applicable provisions of section
20a of the Interstate Commerce Act (49 U.S.C. 20a) in relation to the
issuance of Trustee certificates.